Why Parallel Imports May Rise Producers’ Profits

  • 2005
  • Authors: Raff and Schmitt

This study concludes that even the manufacturers can benefit from parallel trade if certain conditions are met. The results are based on the assumption that, when competitive retailers must order inventories before they know the realisation of the demand, the ability to trade the unsold products incentivise them to make larger orders, to the profit of the manufacturer.